Self Employed Tax Return and Buying a Home
How Will Your 2022 Tax Return affect your ability to purchase a home in 2023?
If purchasing a home in 2023 is one of your New Years’ resolutions, Filing your 2022 Tax return should be high on your list of items that need to be completed. It’s a good time to start gathering your receipts and organizing your bank statements, W2’s, 1099’s or deposits if you are self-employed.
When you are ready to get pre approved before you start looking for a home, one of the first things a Lender will require you to provide is multiple years of your income tax returns in order to verify your income especially if you are self employed. You may have a full time job that does provide a W2, but if you also have a small business that you claim business expenses the lender needs that information as well. Keep in mind that your tax return is used to determine your income. So if you have a job or a small business and show a loss on your tax return, that will reflect on your total income which determines your borrowing power.
Your borrowing power is determined by your income and debt. Reducing your income by claiming business expenses, whether it is unreimbursed business expenses or deductions for a small business, will result in reducing the amount of home you will qualify to purchase.
If you are not sure how this will affect you, contact your Realtor or lender before filing your 2022 income tax return. You can always reach one of our Realtors at 504.754.0059 or [email protected].